Retailers and buyers tend to be financially stronger than their suppliers. A fast way to remove costs from the supply chain, while eliminating delays and capital related risk, is to help them out through early payments in exchange for invoice discounts. Your suppliers in regions such as Bangladesh and Turkey might be paying 12 to 15% interest rates. Allow your suppliers to take advantage of your credit rating. Offer early payment invoice discounting programs that help suppliers get paid quicker. If you fund it yourself, you can offer 7 or 8% rates and both sides win. If a financial institution funds it, there’s no involvement or burden on the buyer and more flexibility for the supplier.
Materials represent one of the largest costs and longest drivers of lead times in your supply chain. Consider consolidating materials usage across your company to leverage common materials where possible. Negotiate prices directly for those common materials to leverage the size of your spend and ensure materials are not a profit center for your suppliers. Help ensure the best possible price for your suppliers. Positioning these common materials can also increase the responsiveness of your supply chain, allowing later product and inventory decisions.